One of the sectors of the U.S. economy hardest hit during the COVID-19 pandemic is the oil industry. Most planes are grounded, public transit is operating at a fraction of its normal ridership and millions of Americans are sheltering in place and not driving their cars. As a result, gasoline consumption has plummeted and oil companies have found themselves awash in their product, even paying to have it hauled away. The price of oil briefly dropped below zero recently, and in early May was hovering just above $20 a barrel.
So the industry is looking to the federal government for a bailout. A member of the commission tapped by Congress to oversee federal bailout funds in the CARES Act voiced concern in late April that the Federal Reserve is seeking to prop up struggling energy companies through its expansion of an emergency lending program aimed at mid-sized businesses.
Between The lines’ Melinda Tuhus spoke with Collin Rees, a senior campaigner with the group Oil Change International. Here, he describes how the industry – a favorite of Donald Trump’s – is seeking to prop itself up through various schemes and how a different energy future might emerge after the pandemic.
COLLIN REES: There is not a direct fossil fuel bailout in the CARES Act. What we’ve seen is a many-tiered approach to getting a bailout by the Trump administration. So there were specific provisions floated during CARES Act negotiations that would have direct, undeniable bailouts of the fossil fuel industry. We managed to beat a lot of those back through loud pressure from members of Congress, by movements on the ground, from groups fighting for climate justice and against fossil fuels everywhere. But what we did see are a number of funds that allowed fossil fuel companies to access them, and then what we’ve seen since the CARES Act passed is an adjustment of the way that it’s interpreted, an adjustment of long-standing rules around which companies are eligible for which funds, that essentially open up much larger amounts of the CARES Act to use by the fossil fuel industry. So that’s one way the Trump Administration has been explicitly bailing out the fossil fuel industry.
The CARES Act passed at the end of March. In mid-April, we saw the Independent Petroleum Association of America, which is a trade association of mid-size petroleum producers, sent a letter asking for an expansion of various different loan funds, for the Federal Reserve and the Treasury Department to relax its guidelines on who could be considered eligible for these funds, to include a lot more oil and gas companies. At the end of April, the Federal Reserve and the U.S. Treasury Department relaxed the guidelines for who is eligible for these loans and essentially opened up hundreds of billions of dollars more that the fossil fuel industry is able to access because of these regulation changes. It also actually relaxed the guidelines on how much of that money had to flow towards workers; it softened the language on how many workers you had to retain in order to keep the funding.
MELINDA TUHUS: Trump had wanted to fill up the Strategic Oil Reserve as a bailout to the oil industry but that didn’t happen earlier, but now, after the price of oil dropped below zero, he has vowed to fill it up, right?
COLLIN REES: That is exactly right. We’ve seen a lot of posturing around the Strategic Oil Reserve. We’ve seen various schemes that were offered to fill it up, to use public dollars to buy up various tranches of oil. As of the end of April it’s still not clear which of these schemes will go forward. So far it’s not exactly clear what’s happening, but clearly there is the intention to use the Strategic Oil Reserve to bail out oil companies.
We’ve also seen plans floated around what’s almost a virtual expansion of the Strategic Oil Reserve. Rather than actually buy oil and use it to fill up the remaining capacity – because there’s not a lot of space in there at the moment – the Trump administration has proposed paying oil companies for large amounts of extra that would be treated as an extension of the Strategic Oil Reserve. And they would keep that oil in the ground or keep it in other places until the debts are called in, which is essentially yet another bailout of the oil industry. One of the things we’re working on with congressional allies and we’ve seen pushback on is bills that would make it very explicit that this is the size of the Strategic Oil Reserve, it can’t be expanded essentially to give a back-door bailout to the fossil fuel industry.
MELINDA TUHUS: Collin Rees, the energy sector — or at least the fossil fuel sector — and its attendant workers have been declared essential, and that means work continues apace, right?
COLLIN REES: That’s correct. In a lot of places, fossil fuel workers have indeed been designated essential workers. There’s the federal designation and state level ones as well, so it does vary a bit depending on where you are, but by and large we’ve seen the fossil fuel build-out continue unabated by the crisis and even pick up the pace in many regions. Crass opportunism, I think, would be an accurate phrase.
The other thing I’ll say is that it has also pushed forward with permitting decisions, comment periods with all these things. The Covid pandemic has rightly kept most of us indoors, but what it’s meant is that you can’t have public meetings, you can’t have public discussions in the same way you normally would. So those with access to lobbyists, those with the phone numbers of elected officials, campaign donors, etc., the system is quite biased toward those with money, which includes the fossil fuel industry and it takes power away from the people. So one of the things we’ve been doing on the outside is pushing for a moratorium on new comment periods, an extension of existing comment periods, essentially, trying to allow for more public participation so the public’s voice can be heard, so that we can actually stop some of these projects and get on the legal record so we can win court cases later.
MELINDA TUHUS: Talk a bit about what you see as the way forward from this incredibly dangerous and distressing time.
COLLIN REES: As we move forward into the next stimulus package and beyond, I think what we’re seeing is a recognition of the need to bail out people, not big polluters; not continuing to enrich the wealthiest parts of our society and the ones who have caused many of these economic crises, but instead to build a social safety net that works for all people.
And there’s a fantastic national, even international cooperation called the People’s Bailout. There’s actually talk floating around about what it would look like to nationalize the fossil fuel industry for a just transition and very explicitly say we’re doing it to protect workers and we’re going to phase out this business. It doesn’t make sense anymore, but we’re going to make sure that workers are protected first and foremost, and the communities that are impacted by extraction.
For more information, visit Oil Change International at priceofoil.org.[Producer’s note: Due to a transcription error, this transcript has been corrected to reflect the amount of funds available that the fossil fuel industry is able to access due to regulation changes. The correct amount is hundreds of billions of dollars.]